Starting right at the beginning by obtaining an employer identification number, collecting necessary identification numbers from employees, and completing all legally required federal and state paperwork is essential to giving a payroll system a strong foundation, according the U.S. Small Business Association. Learning about local laws reduces the risk of paying penalties later. Deciding on a pay period and documenting all aspects of employee compensation come next.Continue Reading
A well-documented employee compensation plan makes it easier to run payroll, maintains the U.S. Small Business Association. A great plan includes compensation levels, information about paid time off, overtime procedures, a method for tracking hours worked, and a list of payroll deductions, such as health insurance and retirement contributions. The compensation plan helps the business owner set up a payroll system. Other business owners in the same area with similar needs for employees are a good source of information about which payroll systems are easiest to use.
Regardless of the payroll system used, it is important to keep accurate numbers and enter them properly on a regular schedule, recommends the U.S. Small Business Association. Payroll runs smoother when there is a file system in place for keeping required forms, such as W-4s and W-2s. A list stating the length of time each form must be kept makes it easy to sort through the files and discard outdated records without the risk of losing important legal papers.Learn more about Managing a Business